Guest Post: The Top 5 Oil & Gas Plays For 2012

2012 has been a stellar year for oil and gas. From East Africa to North America, new technology, major new discoveries, an unparalleled appetite for exploration and a metamorphosing perception of risk have changed the playing field.

We’re looking at potential rather than existing production, and here are our Top 5 picks for this year:

Turkana County, Kenya

We have to start with Kenya, the biggest success story of the year.

In March, the UK’s Tullow Oil and Canada’s Africa Oil Corp. discovered 100 meters of oil in the Ngamia-1 well. The euphoria was in part because this discovery was made on the very first try in the very first well. Stocks shot up to record highs as a result.

The euphoria has not abated. In late November, the same duo made another find of 30 meters of oil in the nearby Twiga-1 well.

September also saw Kenya strike 53 meters of natural gas in its first-ever offshore find in the Mbawa-1 well, off the coast of Malindi. US-based Apache Corp. owns 50% the well in a consortium with a handful of other companies. They’re still digging, hoping that going deeper will reveal the oil.

The bigger picture, however, is that only the surface has been scratched in terms of exploration. The East Africa Rift is believed to hold over 70 billion barrels of untapped crude oil, while offshore Kenya, Tanzania and Mozambique have a joint estimated 250 trillion cubic feet of natural gas. There may be offshore oil, too. The oil discoveries in Kenya so far have been confined to one massive basin, and there are six more.

In addition to the size of the prize here, Kenya is favorable for other reasons as well: It offers relative political stability in the midst of a rather restless Africa; it offers attractive fiscal terms; it offers easy access to export markets; and it has an appetite for infrastructure that is hard to beat.

While 2013 may see some changes in the regulatory environment that could be less favorable, as for 2012, Kenya remains THE number one East African play in terms of potential. Next year will give us a better idea of commercial viability.

Bakken, North Dakota

The Bakken shale play has placed North Dakota ahead of Alaska, making it the number two oil producer in the US for 2012, after Texas. Because of Bakken, the US has increased oil production this year to a level it hasn’t seen in almost a decade and a half. In one month alone this year, North Dakota issued 370 drilling permits.

Stretching from Eastern Montana to Western North Dakota and across parts of Saskatchewa and Manitoba in the Williston Basin, the Bakken Shale Play could yield some 4.3 billion barrels of oil, according to the US Geological Survey. That’s the modest estimate. Continental Resources—one of the major Bakken players—estimates as much as 40 billion barrels.

The clincher is that much of the vast Bakken Petroleum System has not even been tapped. So far, drilling has primarily targeted the Middle Bakken and the upper Three Forks Zones. The Three Forks Zones have not been fully tapped, and the Upper Bakken Shale hasn’t really been tapped at all.

Eagle Ford, South Texas

Eagle Ford is potentially the next Bakken. It’s one of the most ACTIVE plays in the US right now. And what the majors and juniors are playing with is 7,500 in total acreage, five producing wells, two more wells being drilled, and the potential for 100 wells. This year, oil production has increased to some 300,000 bpd (as of August).

Natural gas is also a major Eagle Ford offering. Last year, it produced 914 million cubic feet of natural gas, though that has dropped slightly for this year.

So far, drilling seems to have had even better results than in Bakken. And there is a great deal of confidence and optimism. Enough so that Marathon Oil is planning to shift its primary focus from Bakken to Eagle Ford and spend one-third of its operating budget there. Right now Marathon is producing around 40,000 net barrels of oil equivalent (boe) per day and plans to more than double this next year. It’s already doubled production this year (and, incidentally, seen its profits jump 11% in the first quarter).

The biggest producer is EOG Resources (NYSE:EOG), putting out about 110,000 boe/day and holding reserves of around 1.6 billion boe.

Analysts think Eagle Ford could end up out-producing the Permian Basin in west Texas—and soon.

Mediterranean Plays

The Levant Basin in the Mediterranean has an estimated 122 trillion cubic feet of recoverable natural gas, and around 1.7 billion barrels of recoverable oil. And the area has seen a flurry of activity recently.

Between 25 and 33 billion cubic feet of this gas is in Israeli waters. The rest is carved up between Greek-held Northern Cyprus (which is a bit problematic), Syria and Lebanon.

Of course, along with this potential comes some uncomfortable geopolitics; on one hand among Israel, Lebanon and Syria; on the other hand between Israel, Turkey and the Greek Cypriots.

The first new natural gas field in the region is expected to begin full-scale production this year, with two additional fields coming on-line over the next six years.

Specifically, we’re talking about:

• The discovery to two offshore natural gas fields in northern Israel (Leviathan and Tamar) with an estimated 25 trillion cubic feet (about 100 years year of gas for Israeli domestic use)• Estimates that Israel has a potential 1.9 billion barrels of untapped oil• About 5-6 tcf of natural gas in the Aphrodite field claimed by Greek-held Northern Cyprus (just west of Israel’s Leviathan field)

Exploitation will be a bit expensive, though. Israel’s offshore fields are located 100 kilometers from the coast and in 6,000 feet of water. The natural gas is some 5,000 feet under the sea bed.

Offshore Tanzania & Mozambique

Tanzania has become a gas sensation in a very short time, with recent offshore discoveries of some 33 trillion cubic feet.

Sweetening the deal, we have political stability and low security risk, relatively speaking, as well as an existing 70-million-cubic-feet/day capacity for natural gas processing. More gas infrastructure is in the works.

Next door, Mozambique’s 130 trillion cubic feet of gas in its offshore Rovuma Basin is eye candy for foreign investors, and officials believe there is double this amount still waiting to be discovered. It’s not as attractive as Tanzania for one reason: There is no infrastructure.

Oil and gas is a dead industry. The green revolution is going to completely obliterate the dreams of peak oilers. Those who are counting on oil futures and oil stocks to carry them into the higher echelons of society are in for a rude awakening. Green energies already starting to replace oil and gas. Wind farms are starting to appear everywhere. I’ve seen pictures of wind farms appearing in waiting rooms, shop windows and in street posters on every block. The revolution is coming. Those who prepare for it by putting together a green portfolio will ride this wave to great fortunes. Those who remain fixated on the ways of the past will suffer severe financial losses.

It DOES NOT MATTER, for the eleventy TRILLIONTH time, how much there are in RESERVES of ANYTHING.

The ONLY THING that matters for something you intend to consume at a desired RATE, is the freaking RATE at which it can be produced!

The author states NOWHERE the expected rate of PRODUCTION from any of these reserves. I'll help you out here: the "new Saudi Arabia," aka Canadian oil sands, have nearly the same RESERVES as the Saudis did. However, their reasonable maximum PRODUCTION RATE is less than HALF of what the Saudis achieve NOW. And even hitting that requires insane amounts of freshwater and some supplemental energy source (right now NG) to mobilize the bitumen. Nevermind the FLEET of mining vehicles (the largest dumptrucks on earth, etc.) driving through bazillions of gallons of diesel just to carry this crap up out of the MINE. And that's what oilsands are, MINES.

This should illustrate to tards just how production peaks and resource quality works, the principle of "low-hanging fruit" and effectively how evolution works. The reserves left after the low fruit is picked are of NECESSARILY lower quality, meaning the same amount of "stuff" YIELDS at a lower rate!

ALL the YIELDS across the planet are declining...this is precisely WHY interest rates are at such insane lows despite de facto bankruptcy, but you still cannot get a loan. It's all about yield. Unfortunately people don't work well in their pathetic average brains with concepts like rates.

The point is, you complete jackass, that even IF one were to concede the validity of your bigotry, and that some races are "inferior" to others in some measures, then just what practical, or possible, consequences and policies would flow from that acknowledge? NeoApartheid? Death camps for niggers? Come on, tell us Trav, you vile piece of shit, what exactly do we do with all those inferior darkies? Let's ignore that ALL human attributes exist on a continuum, and that what YOU focus on is merely a group racial mean. You are asdisgustingly collectivistic in your thinking as any Nazi, or as AnAnonymous for that matter.

He talks about a cartoon he did, advertising a fantasy product called [Canned] Nigger Hearts. "This cute kid says, 'Hey, mom let's have nigger hearts for lunch!' with this kinda jigaboo image on it. And it's like canned nigger hearts. It looks like a straight newspaper advertisement. It's actually about all the sordid murky stuff going on in the real world, but some people thought it was a racist image. Those things are complex, y'know. They were as much about what was going on inside white people as their attitude to black people. I liked the idea when I was doing that stuff of making things that looked as if they were one thing but were actually something else."

But don't EXPECT to be taken fucking seriously if you CANNOT acknowledge what is PATENTLY OBVIOUS. You will continue to IGNORE why Detroit is detroit, why Rhodesia became Zimbabwe the Clusterfuck and what the hell is happening to a formerly 1st world country in South Africa.

And, Hispaniola, why DR is TYPICAL of a central american country and Haiti, on the SAME FUCKING ISLAND, is typical of a subsaharan african country. Maybe the miasma that you idiots think causes such disparities only floats over one half. Go figure.

Oh, in case I forgot to tell you this, go fuck yourself. Belly crawling, sniveling bitch ass whites are the LOWEST form of life. The absence of a practical SOLUTION does not negate the existence of a PROBLEM, you stupid, bumbling fuck for brains.

leave it to the canucks to fuck up in the foulest way some of the most pristine land on earth for a short-term gain with these stupid tar sand plays. at the end of the day all you have got is clean water,soil and air. another way the bernank and his "push everybody into commodities" is distorting things.

@ 93 million barrels used per day world wide.. I dont think a windmill is going to be able to put 7 gallons of oil in a car tire? Peak oil is here and all one needs to use as a gage is food prices. Humans are truely fucked and there is and will be a massive die off in the future. OIL feeds the world .

Depends on allocation. If less oil goes to airplanes, cruise ships, and commuting 2 hours to work every day with one person in each car, and more goes to food, then the oil shortage won't be such a big deal.

Changes in fresh water supply, weather and climate may be bigger issues.

Not to feed the technocornucopians, but everything seems to hang on production of electricity and the viability of transport without hydrocarbons.

We can explore options to achieve that. First we need a base power source. Nuclear fission is funtionally inexhaustible, but only with breeder reactors. The technology exists to fiss actinides and other nuclear waste down to half-lives of a few hundred years, but this requires Gen IV reactor technology that really isn't seeing much investment. Compared to military expense, it's not even a blip.

On that notion of investment, where IS the money going? Stealth drones? Killing robots? War stuff. Spy stuff. DARPA has the robot cheetah and robot mule. The RFP on the robot cheetah clearly specifies what they want it for...to hunt down and kill people, avoiding defensive fire while it does so. 'course they state it in terms of "subdue noncompliant subject" but is this thing expected to handcuff you? GTFO here. It's an HK, just like the robot mule with the rotary engine that can carry 300lbs 15 miles. It will go from a pack animal to hey let's mount a cannon on this thing. It can sit silent in the camouflage, wake up and just absolutely ROCK out with a minigun or whatever and mass kill people. It doesn't need food or drink or anything. A good muffler makes it really quiet. They have robot sharks and robot water snakes, even robot tree climbers. Our public loves war so long as no real people on OUR side die. We send robots to do it.

My kids ask, how is this robot sea snake gonna kill people? Or the robot tree climber? This just shows how kids are naive...ok, the robot sea snake is just going to wrap itself around you. The robot tree climber is going to get near you then explode. Gotta think laterally.

Anyway, on energy...assuming functionally inexhaustible fuel in fission reactors, we have to have a storage means. We are already at the theoretical limits of chemical batteries. We can't do cars with them, not like with liquid fuels. Just like we can't do Mars with a chemical rocket....just doesn't have the physics.

The only storage alternatives I can think of are superconducting coils to persist far more current than a battery or something exotic like a nuclear isomer. Dunno how you recharge the latter of these.

YBCO is a miracle material, people won the Nobel for HTS; but it took 20 years of time for it to start to be used in nearly any commercial applications. The R&D time cycles weren't there as far as ROI for private actors and the gov only cares about stuff that can kill. Only since maybe 2006 have YBCO tapes shown up and they have already dropped MRI prices by an order of magnitude and will permit applications that were impossible prior. CERN is using superconducting tapes, BSSCO ones, in its collider and the difference is profound. But to push technology, you have to focus on it. Our best minds are coming up with stealth drones to spy and kill, robots to spy and kill, planes to spy and kill, computer centers to spy and help kill, new aircraft carriers to spy and kill...everything revolves for us around spying and killing.

I am just back from Peru, where I finally did some digging into their large scale work powering their car fleets on naturral gas and its derivative LPG. These guys put up the money and have an impressive infrastructure! About 20% of Lima's car fleet runs on CNG or LPG (difference explained below at the link). One of Ameru's own vehicles runs on LPG! It costs about $1000 to make the vehicle conversion, but you save 50% on fuels costs, a GREAT rate of return. The Peruvian NatGas business community is worried that our HUGE reserves will prevent them from building petrochemical and plastics plants there, they are right to be concerned...

You are spot on! I have always agreed with T Boone Pickens about CNG for the heavy trucks- it will be the standard in 10 years for the trucking industry.

Energy is a great thing once you start to think about it the right way: Think of oil and gas as toxins affecting our dear mother earth- we are doing God's work to remove it and at the same time we are saving the planet from the ice age when we burn these hazardous toxins. God willing, Yellowstone and other pristine areas will be lined with drilling rigs removing these evil fuels soon.

I don't even like to mention how well things are going here in Texas- this site is supposed to be nothing but gloom. The natural gas is a big game changer as the new techniques breaths fresh life into the older fields. In Midland the per capita income is 60K (2nd highest in the nation). No housing bubble here, wouldn't even know there is a recession going on if it weren't for the federal government beggars mugging us for their Socialist agenda.

One thing is certain: energy costs would plummet if the gobermint would open up more federal land. When NASA did their tether ball experiment we were able to see 60 miles deep into the earth's surface- oil is everywhere. It is just part of the game- acting like it is scarce.

Okie dokie, Major Douche Bag! Were those pictures or actual windmills in waiting rooms? Next thing you're going to tell us is that they will insert methane recovery tubes in obese women's arses to recover green fuel while they walk through Walmart and beat their kids.

check the charts for NatGas-it's on a slide back down. another mild winter(it is 50 degrees in Chicago today-with basically the same call through X-Mas) does not bode well for the "widow maker trade". also-that big Israeli field is BS-they still rely on Egpyt for alot of their NG.

sorry for insisting, but do you believe in the 10 MMBPD meme of Us liquid oil production in 2020, which includes NGL/Condensate/Heavy Bakken/Bio corn oil...its the "new US energy horizon" along with frack gas, which is now of interest in Eurozone; as the UK makes that plunge.

The Bakken cannot grow without frantic avalanches of oil wells. The day a well is completed and starts to flow is the highest flow rate that well will ever see. Every day less of a flow rate flows. It becomes subtractive. New wells have to overwhelm that.

The article mentions Marathon diverting drilling to Texas. That is very bad for Bakken output growth.

Remember, probably more than anything else about oil remember this:

Oil is not measured in barrels. It is measured in barrels/day. When the barrels/day flow stops growing, so does optimism.

The farther into the future you look, the more presently producing wells there will be with reduced production. Those reductions become additive. If you don't drill more and more frantically, you can't overcome them.

The ugly part of the Bakken is not . . . "there will be 1 million bpd of production". That's not the problem. The problem is they may hit that number, but only hold it for 6 hours. The decline rates for present wells are steep and drilling rig count is falling.

why concentrate just on Bakken, I hear ya, but that report has a cumulative view for US liquid energy balance. From all sources. To contradict that we need somebody who has an angle on each segment. It sounds far fetched but the euro press is going bonkers about US oil production surge in coming years.

Shale gas plays are not gas plays. They produce NGLs, seemingly as a byproduct, but they fund the entire effort. NGLs are priced higher than gas, so they are actually the primary product of a nat gas well.

A barrel of NGL does not have the energy content of a barrel of crude oil. It's about 60%. Adding up total liquids is an invalid calculation. You can't stack a barrel of NGL onto a barrel of crude on a graph and declare a total that is meaningful. NGL barrels are usually used as industrial feedstock; not as input to a refinery to make gasoline.

Total liquid numbers grow because of shale gas wells. Not shale oil wells. They don't equate to continued ability to fuel a truck that brings food to your grocery store shelf.

NGL is light, and has same BTU/kg as oil but less per cu M, so you r right on volume basis. But NGL is precious as its transportable cheaper than gas via pipeline. NGL/condensates (C5 cut) are the most valuable portions of NG production. And we will be finding more gas than oil in the future.

There is almost limitless oil and gas in source shale. The issue is the cost of getting it out. More than likely the best and cheapest shale is being exploited now .... and those shales are still pretty expensive all in. Most currently drilled Bakken wells require $60-70 wti all in to make a decent return. 5 years down the road you'll need $130 oil. Just look at production profile of the first shale, the Barnett and you know what is coming.

Shale story is another bit of wall street hype . . . meant more to exploit investors than natural resources

IEA doesnt want to talk about that though, because it would upset people.

What's worse is that they make no attempt to talk about NET boe...it's always some BS fudged "liquids" total that they can make look however they want nevermind that the barrels don't have the same energy content.

Or that tarsands requires massive negative balance on NG and diesel to mine that crap and wash it off.

You might want to peek into how the IEA was forced under political pressure to effectively LIE on everything they've produced for over a decade now.

This 10 mbpd can be filed with their 130mbpd of world production in 2020 or whatever it was.

The people they fired after that WEO...the last time they released an alarmist outlook. Then they went and scrubbed it...when was that, like late 90s or something? Calling for peak in the next decade and the US came down on them like a shelf of the BOE's tungsten bars.

then there is the USGS which is so laughable I cannot understand how someone could even mention it with a straight face.

Every single projection fills in the gap between what they REALLY project and what we NEED by "undiscovered countries." Or whatever...fantasy BS. Read any of the late 2000s vintage WEOs and you will see it. There have been whistleblowers crawling out from under the floorplanks there exposing how IEA has ignored and softsold Peak while pretending that all the oil we could ever wish for will just be "found."

Then you have these idiots tacking on all these imaginary "reserves" without reference at ALL to the EROI or even base liquid production rate of the resource.

Beware the shale bullshit they've been pumping lately. Trying to go for an energy bubble based on bullhit. The ROI makes it a waste of time, but the very bubblish 370 drilling permits is a good indication of what they are trying to do.

And the estimates are even more reason to be cautious. Seriously, between 4.5 - 40 billion barrels. Thats quite a wide margin there. Pump, pump, pump the bubble.

who the fuck "chose" them? if we are all worship the same God-that of Abraham-then Jews,Catholics, and Muslims are all "chosen". also-Israel is a nation of welfare queens sucking on uncle sam's dry and cracked teats.

you're right about that; the jews are no more "chosen" than any other people. Everyone must come to God by "calling on the name of the Lord" (notice no mention of repentance, but the calling on implies need). Anyone can be spiritually made one with God. Catholics must come in the same way as must a Jew. But as far as physical blessings are concerned, the Jews are more blessed than other people and God has used them to be a blessing; just look at the ratio of jews to gentiles in every field, and they are great in those fields. God told Abraham, a gentile moon-god worshipper to follow Him, saying, "and in thee shall all the families of the earth be blessed." They would be blessed to have the opportunity of taking the same faith in God through the One that would come through his loins-- Christ.

by ratio of jews to gentiles I mean there are more jews in more fields of knowledge than would naturally occur. When a Jew is saved he becomes a member of Christ's body-- the church. At Armageddon the Jews will be saved nationally by repentance after 1/3 of them are killed by Antichrist--or is it 2/3? I don't know It's just pretty sad in view of their promises and in view of their sorry history, that that's what it takes for them to be saved as Israel.

Indeed, Kurdistan is rarely mentioned despite its massive reserves. As for GKP, it has been a non-stop drama with speculation regarding its takeover by Exxon at some point, which would have been of little surprise, considering the around 13.5 billion barrels of gross mean oil-in-place, found in its Shaikan block.

At some point I thought that Rothschild would sweeten a deal for Todd Kozel, so that he would be able to cash out, and allow for a Vallares/Genel - GKP mergence of sorts, which would eventually be sold partial or as a whole to Exxon, when its reserves would be priced at multiples.

"Stretching from Eastern Montana to Western North Dakota and across parts of Saskatchewa and Manitoba in the Williston Basin, the Bakken Shale Play could yield some 4.3 billion barrels of oil, according to the US Geological Survey'

Too bad, as with the keystone pipeline, all that oil would not stay in the US for the US. It will go to the highest bidder overseas and with the piss poor value of the USD and it's ever deflating value, our energy costs will 'necessarily skyrocket'.

Yeah, real aswesome. Just fuck those that have set up lives outside the big city. I know, really, it'll be awesome when people have to spend, what, 500-1000 percent more on food, clothing, just about anything that isn't made or grown in the area? Super, then the government canwork harder to take more money from idiots like you while creating more and more people who will need their help. Yeah, super suggestion. Then only elites can drive around, have things, enjoy life, everyone else can just shit. that'll be super. Beautiful vision of the future numb nuts.

Why do you hate America and why do you continue to live here if you hate it so much.

Ps3. Thorium Nuclear Module Reactors, can't melt down, or up... and light-water is no mystery today. Only drawback is where will the mega, mega wmd's controlled by the MIC get their plutonium, and who will have any use for uranium anymore!!!